The BBC reported today that “Saudi Arabia has given Iranian diplomats two days to leave the country, amid a row over the Saudi execution of a top Shia Muslim cleric.”

On Saturday 2nd January Saudi Arabia executed 47 prisoners who had been convicted of terror related offences. Most of the 47 people executed were Sunnis convicted of involvement in al-Qaeda-linked terror attacks over the last decade.

Sheikh Nimr al-Nimr was one of the 47 and had been a persistent critic of Saudi Arabia’s Sunni Royal family. He had been arrested many times during the past 10 years and alleged that he had been beaten by the Saudi secret police on one occasion. He had a strong following from Saudi Shia’s especially youth members. Sheikh Nimr was involved in anti-government protests that erupted in Saudi Arabia in the wake of the Arab Spring, up to his arrest in 2012.

Sunday evening, police came under heavy gunfire in his home town of Awamiya in Saudi Arabia’s Eastern Province, leaving one civilian dead and a child injured, according to the Saudi Press Agency.

Security forces called the incident a “terrorist” act.

Saudi Arabia announced it was severing diplomatic relations with Iran after demonstrators stormed the Saudi Embassy in Tehran, and late on Sunday gave Iranian diplomats 48 hours to leave.

It has also recalled its diplomats from Tehran.

Saudi Foreign Minister Adel al-Jubeir said Saudi Arabia would not let Iran undermine its security, accusing it of having “distributed weapons and planted terrorist cells in the region”.

Iran’s Supreme Leader Ayatollah Ali Khamenei warned that the Sunni Muslim Kingdom would face “divine revenge” for the execution – an act which also angered Shia Muslims elsewhere in the Middle East.

This destabilisation will certainly unsettle any progress made between the US and Iran and its relationship with Saudi Arabia. Such tensions can only lead to further uncertainty in the financial and commodities markets. The US has already called for “leaders across the region to take affirmative steps to calm tensions”.